- Blog post
Non-monetary rewards: Are they more valuable than cold, hard cash?
Managers are always intrigued by the idea of giving non-monetary rewards to employees. It feels like you’re getting something for nothing (or almost nothing). And there’s always a worry that cynical employees will be rolling their eyes and thinking, “Gee, thanks. But show me the money.”
Research suggests that these rewards aren’t about saving a buck. And they aren’t anything like a raise or bonus.
A recent review of the science and theory of non-monetary rewards appeared in Harvard Business Review. It outlines a crucial distinction between cash (raises, bonuses) and non-monetary rewards. And it shows that non-monetary rewards can be extremely valuable if they’re offered in the right way and for the right reasons.
Incentives and rewards
First the distinction: There’s a vast difference between incentives and rewards. Incentives are things like salaries, bonuses and promotions. They’re offered before the desired actions – basically, “If you do this, you’ll get that.” That sounds like a great way to motivate people – and it can be, depending on the size and nature of the incentive. But incentives are perceived as a transaction.
And, research shows, employees feel a certain way about transactions. A deal is a deal, and assuming the employee fulfills the conditions, they see the incentive as something that’s owed to them. Or they may decide the incentive isn’t worth the effort. It may even trigger resentment: “What, they expect me to bust my hump for a lousy 500 bucks? No thanks.”
A reward, on the other hand, isn’t negotiated in advance. It’s given after the fact to acknowledge a job well done. And it fulfills a deep psychological hunger: the desire for recognition.
“They know me”
Imagine, for example, that the employee did bust their hump – not to earn a bonus, but because they have a strong work ethic and sense of responsibility. Later on, you simply hand them a check for $500 – one you never promised, and one the employee didn’t expect. “Thank you for your hard work,” you say. “I want you to know how much we appreciate the time and effort you put in.”
You can see that this reward is going to have a much bigger impact on the employee. It’s not just about the money. It’s that you and the company see what the employee has done and want to recognize it.
And because rewards aren’t transactional, the amount doesn’t matter nearly as much. A gift card for $100 to the employee’s favorite restaurant might be even more valuable than a check for $500. When you “recognize” someone, it literally means you know who they are. So the more you can personalize the reward, the more you add to the value. It’s a way of saying, “You are someone I value, and I pay attention to you. I know what’s important to you, and I’ve made an effort to recognize that with this reward.” In fact, sometimes a heartfelt and genuine “thank you” will be more motivating than any tangible reward.
Source: Modestino, A. S., & Shoag, D. (2018). Research: When the Economy Is Good, Employers Demand Fewer Credentials. Harvard Business Review.